Galliford Try to set aside £98m to cover costs of legacy contracts
Galliford Try is to take a £98 million one-off hit for two major legacy construction contracts following a reappraisal of costs to complete the projects.
The group said one of these projects will finish on site in summer 2017, while the other, which represents the larger proportion of the estimated costs, is due to complete in mid-2018.
Both projects were contracted in 2014 or before.
A trading update today said: “A reappraisal of costs to complete and recoveries from two major infrastructure joint venture projects has substantially increased the anticipated liability to conclude the legacy contracts (contracted in 2014 and earlier) in the group’s construction business since Galliford Try reported its half year results on 21 February 2017.”
The group has set aside £98m to cover the costs with 80% of that accounted for by the two problem jobs.
It added: “One of these projects will finish on site in Summer 2017, while the other, which represents the larger proportion of the estimated non-recurring costs, is scheduled to complete in mid-2018.”
The firm is part of a joint venture building the new Queensferry Crossing which is due to open this August.
It is also working on the delayed £550m stretch of route between Balmedie-Tipperty on the vast Aberdeen Western Peripheral Route project in joint venture with Balfour Beatty and Carillion.
Galliford Try added that the underlying construction business continues to perform well as it continues to be selective about future bidding.
Chief executive Peter Truscott said: “The impact of the legacy projects in Construction, in particular the two large infrastructure projects, is regrettable.
“However, as described in our recent Strategy presentation, Galliford Try is no longer undertaking large infrastructure jobs on fixed price contracts.
“There are no other similarly procured major projects in our current portfolio and we are encouraged by the performance of the underlying portfolio of newer work.”